President Trump suggested his decision to defer payroll taxes for some Americans via executive order could become permanent, saying it will have “no impact” on Social Security benefits.
“This will have zero impact on Social Security,” Trump told reporters on Sunday before boarding Marine One. “We protect Social Security.”
In an attempt to bypass a deadlocked Congress, on Saturday Trump signed four executive actions — including one that postpones the collection of payroll taxes from Sept. 1 through Dec. 31 for individuals earning less than $104,000 annually, or less than $2,000 per week.
He said the cuts “may be permanent,” but did not elaborate further.
Currently, all employees and employers pay a 6.2% payroll tax on wages capped out at $137,700. An employee earning $50,000 per year, for example, pays $3,100 in payroll taxes.
That money goes toward specific programs such as Social Security, health care, unemployment compensation and workers’ compensation. Workers also pay a Medicare tax of 1.45%.
Defenders of Social Security were quick to criticize Trump for suspending the taxes, suggesting it was part of a broader initiative to gut the social program.
“We just heard it straight from Trump’s own mouth,” Social Security Works wrote in a tweet. “If reelected, he will destroy Social Security.”
The order is technically a deferral of payroll taxes — not a suspension — meaning that the taxes will eventually be due at a later date. However, Trump has pledged to pursue a permanent cut to the taxes.
“If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax. I’m going to make them all permanent,” Trump said during a Saturday news conference. “In other words, I’ll extend beyond the end of the year and terminate the tax.”
At the end of April, the government projected Social Security, one of the biggest federal benefit programs, would be unable to pay full benefits starting in 2035. At that point, only 76 percent of benefits could be paid out. But that was before officials accounted for the virus outbreak, which they agree will deal a substantial blow to the program.
When factoring in the crisis, the Bipartisan Policy Institute estimated that the depletion date would jump from 2035 to 2029.
The bulk of the money that Social Security pays out in retirement and disability benefits stems from payroll taxes; the program receives some additional funding from the taxation of benefits and interest earned on securities held by the trust fund.
“All three revenue sources are threatened by the current recession,” the Washington-based think tank added.
In 2019, 54.1 million people received Social Security benefits. About 40 percent of Americans over the age of 60 who are no longer working full-time rely solely on Social Security benefits for their income, according to the National Institute on Retirement Security. The annual benefit is about $17,000.